Fast money: Formula One ‘injects nearly $1BILLION into the US economy with races in Austin, Miami’

To many Americans, Austin, Texas is strictly known for Longhorns football, the South by Southwest music festival, and actor Matthew McConaughey’s 1999 arrest for playing his bongos in the nude.

The city’s profile outside the United States has been even less noteworthy, that is, until 2012, when the Circuit of the Americas racetrack was completed and began hosting an annual Formula One event.

Now, thanks to the rising popularity of Europe’s premiere racing series, Austin enjoys an additional half billion dollars, or so, in annual revenue from the US Grand Prix. Not only does that eclipse the estimated $280 million South by Southwest brought into Austin’s economy last spring, according to a report by Greyhill Advisors, but it’s also helped to raise the city’s profile internationally.

‘It’s become a huge piece of our tourism economy, and that’s really kind of an interesting evolution in Austin,’ Jon Hockenyos, president of Austin-based economic analysis firm TXP Inc., told the Austin American-Statesman ahead of Sunday’s US Grand Prix.

Welcome to the new Austin: An international city swarming with Hollywood glitterati, glamourous fashion models, and billion-dollar sponsors, such as Aramco, Saudi Arabia’s state-owned oil company.

It’s an unlikely transformation, and one that’s been made possible by the Netflix’s behind-the-scenes F1 series, ‘Drive to Survive,’ which has introduced American viewers to the sport’s biggest names.

And Austin isn’t alone.

With the addition of the Miami Grand Prix last May and the Las Vegas Grand Prix in November of 2023, Formula One now boasts three US tracks, while a trio of American cities will split annual revenue in excess of $1 billion. This year alone, F1 generated a reported $434 million in direct spending in Austin on top of $189 million indirect spending to local businesses, not to mention an estimated $349 million in Miami. 

Rapper Megan Thee Stallion looks at the media in the pit lane before the Formula 1 United States Grand Prix at the Circuit of The Americas in Austin

Fans of Red Bull’s Dutch driver Max Verstappen wait for the start of the Formula One United States Grand Prix at the Circuit of The Americas in Austin

Mercedes AMG Petronas Motorsport driver Lewis Hamilton (44) of Team Great Britain, former NBA All-Star Shaquille O’Neal, and Red Bull Racing Honda driver Max Verstappen (33) of Team Netherlands are seen following the 2021 US Grand Prix

Former US First Lady Michelle Obama visits the Mercedes garage the qualifying session for the Miami Formula One Grand Prix at the Miami International Autodrome in Miami Gardens, Florida, on May 7

In this aerial view, fans watch the action during the third practice session at the Circuit of The Americas in Austin last year

To be clear, F1 isn’t new to the United States.

Although the country’s preferred form of open-wheel racing has traditionally been Indy Car, Europeans have been racing stateside since 1908, when France’s Louis Wagner captured the American Grand Prize in Savannah, Georgia.

The US even had a presence in F1’s inaugural season of 1950, when the Indianapolis 500 doubled as the third race of the series calendar. However, as noted in a piece for Williams Racing’s website, not one driver who competed in the first two races at Silverstone or Monaco was at the Brickyard that year.

The US had a presence in F1’s inaugural season of 1950, when the Indianapolis 500 doubled as the third race of the circuit calendar. However, not one driver who competed in the first two races at Silverstone or Monaco raced at the Brickyard that year. Instead, the 1950 Indianapolis 500 was won by Johnnie Parsons, whose name was misspelled on the Borg-Warner trophy as ‘Johnny’

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Instead, the 1950 Indianapolis 500 was won by Johnnie Parsons, whose name was misspelled on the Borg-Warner trophy as ‘Johnny.’

The first incarnation of the US Grand Prix was held in Sebring, Florida in 1959. It would move to Riverside, California in the following year before landing in Watkins Glen in the Finger Lakes region of New York State. 

The track would ultimately lose its hold on the F1 schedule in 1981 over an $800,000 debt to teams.

By that time, though, races had sprung up in Long Beach, California (United States Grand Prix West from 1976 until 1983) and Las Vegas (Caesars Palace Grand Prix from 1981 until 1984). The Detroit Grand Prix was launched in 1982, lasting six years, and the Dallas Grand Prix debuted in 1984, when F1 legend Nigel Mansell collapsed in the 100-degree heat while pushing his car across the finish.

But after the US Grand Prix’s disappointing two-year run in Phoenix, America found itself off the F1 calendar entirely by 1991, and wouldn’t re-emerge until 2000, when Michael Schumacher won at the Brickyard.

Schumacher would go on to win four more US Grands Prix in Indianapolis, before finances got in the way. Given the expensive fees to host such an event, Indianapolis Motor Speedway needed a major title sponsor, which never materialized.

Worst of all, the 2005 race was marred by controversy over the safety of Michelin tires, prompting seven teams to withdraw following the formation lap. Only three teams and six cars finished that year’s race, allowing Schumacher to pick up a relatively easy win.

Afterwards, driver David Coulthard called the race a ‘farce,’ while then-F1 CEO Bernie Ecclestone conceded the event was ‘not good.’

By 2009, the US was once again absent from the F1 calendar. But F1’s decades-old effort to capture the lucrative, untapped American market was far from finished.

In 2010, Austin was awarded a 10-year contract to host the US Grand Prix, starting in 2012, while New Jersey made a doomed effort to host its own race in 2013. 

Bruce McLaren getting the checkered flag to win the first ever US Grand Prix in Sebring, Florida in 1959

Niki Lauda with the Ferrari 312T at the first United States Grand Prix West held on March 28, 1976 in Long Beach, California

Patrick Tambay in the pits during the 1983 Detroit Grand Prix, Ferrari 126C2B, Detroit street circuit, June 5, 1983

A shot from the 1983 US Grand Prix West in Long Beach, California, which was ultimately won by France’s Patrick Tambay

Phil Hill, Jim Hall, Cooper-Climax T51, Lotus-Climax 18, Grand Prix of the United States, Riverside International Raceway, 20 November 1960

German Formula One driver Michael Schumacher, of team Ferrari, takes the checkered flag waved by Indianapolis Motor Speedway President Tony George at the United States Grand Prix at the Indianapolis Motor Speedway, September 24, 2000

Schumacher gestures to fans at Indianapolis Motor Speedway in 2001 

Mario Andretti, an Italian who migrated to Nazareth, PA, with his parents and twin brother Aldo in 1955, is one of the truly legendary stars of motor racing. So far, Andretti is the only driver in history to win the Indianapolis 500 Indy Car race (1969), the Daytona 500 NASCAR Cup race (1967) and 24 Hours of Daytona Sports Car race (1972) at Daytona International Speedway, plus the Formula One World Driving Championship, a feat he accomplished in 1978

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Things didn’t get off to a strong start in Texas. 

The event’s three-day attendance figures plunged from more than 265,000 in 2012 to 224,011 in 2015 amid inclement weather and funding issues at the Circuit of the Americas.  Things began to change in 2016 as the US Grand Prix drew 269,889 attendees over the three-day event, but the real shift occurred in 2019, with the launch of Netflix’s ‘Drive to Survive.’

F1 had traditionally faced an uphill in the States, given the dearth of American drivers, just 57 of whom have competed in the series. Only two American drivers have won F1 championships, Phil Hill and Mario Andretti, and the latter was actually born in what was then Italy (now Croatia).

Now, though, Americans are being introduced to the likes of Lewis Hamilton, Max Verstappen and Daniel Ricciardo through Netflix’s ‘Drive to Survive,’ giving the sport access to the streaming service’s 74 million subscribers. What’s more, American audiences are being introduced to the complexities of the sport, some of which contributed to the country’s limited understanding of F1.  

Due to the pandemic, which resulted in the cancelation of the 2020 US Grand Prix, F1 didn’t enjoy the benefits of the Netflix series until last year, when 400,000 spectators attended the three-day event. Not only was that a record for the US Grand Prix, but the race actually topped all F1 attendance figures for the 2021 season. 

Buoying the race’s popularity was a new wave of celebrity fans that included rappers Megan Thee Stallion and Pardi Fontaine, NBA legends Shaquille O’Neal and Chris Bosh, as well as Serena Williams and her husband, Reddit co-founder Alexis Ohanian.  

Venus and Serena Williams walk on the grid during the F1 Grand Prix of Miami at the Miami International Autodrome on May 8

A general view of the start during the F1 Grand Prix of Miami at the Miami International Autodrome on May 8 

Michael Jordan walks in the Paddock prior to the F1 Grand Prix of Miami at the Miami International Autodrome on May 8

Race winner Max Verstappen of the Netherlands and Oracle Red Bull Racing, Second placed Charles Leclerc of Monaco and Ferrari and Third placed Carlos Sainz of Spain and Ferrari celebrate on the podium during the F1 Grand Prix of Miami at the Miami International Autodrome on May 8

Lewis Hamilton of Great Britain and McLaren Mercedes celebrates after winning the F1 Grand Prix of USA at the Indianapolis Motor Speedway on June 17, 2007

And that was only the beginning. 

This week’s US Grand Prix has already sold out of three-day passes, and currently only has tickets available for Friday’s practice session and Sunday’s race after Saturday’s qualifying was sold out entirely. 

And that follows May’s Miami Grand Prix, which drew 243,000 fans with average ticket prices going for $2,400 and some costing as much as $33,700 on the resale market. 

The event, sponsored by Crypto.com, attracted everyone from Venus and Serena Williams, to Tom Brady, Dwyane Wade, Michael Jordan and even former First Lady Michelle Obama. More importantly, it also brought in $350 million to the local economy as 66 percent of attendees came from out of town, according to an economic impact report from Applied Analysis.

‘I think it was an incredible atmosphere,’ Verstappen told reporters at the post-race press conference after winning the Miami Grand Prix.

‘It was really incredibly well organized,’ he added. ‘Really nice to see that. It’s not easy to put an event on like this. They did an amazing job and I had a lot of fun driving around.’

The event was far from flawless, though, as drivers complained that the surface was not conducive to modern racing. 

‘I think track-wise, we can improve a few areas,’ Verstappen said. ‘But I have to say in the race, I think sector one was quite fun. I think sector two can be maybe a bit… would have been nice if it could have been a bit faster and flowing for an F1 car like we have right now – you know, super-long, heavy, wide. The Turn 14-15 chicane is a bit of a tricky combination.’ 

Paulo Banchero poses for a photo with the car of Sergio Perez of Mexico and Oracle Red Bull Racing on the grid during the F1 Grand Prix of Miami at the Miami International Autodrome on May 8. The following month, he was drafted first overall by the Orlando Magic in the NBA Draft 

Jim Clarks grids his Lotus 43 BRM H16 for the US Grand Prix of 1966 at Watkins Glen, New York. He would win the race scoring the only win for the H16 BRM engine

Similar challenges are likely to emerge in Las Vegas, where a street course is being planned for its inaugural Grand Prix next year.  

But track issues aside, Nevada Governor Steve Sisolak expects the Las Vegas Grand Prix to generate ‘over a billion dollars’ with a crowd of 170,000 spectators strewn about the city. 

Such a large crowd would translate to 400,000 room nights at local hotels, Sisolak said, all but guaranteeing a financial windfall for the city. 

‘The direct economic impact is approaching half a billion dollars and the indirect impact will be over a billion dollars by the time we’re done, Sisolak said. ‘We could not be more proud of this. Nobody puts on a party like Las Vegas.’

And F1’s economic impact on the US is not limited to Austin, Miami and Las Vegas.

In June, the Liberty Media-owned series reached a three-year extension worth up to $90 million annually with ESPN for its US media rights, according to Sports Business Journal. That’s a dramatic rise from the $5 million the cable giant currently pays for F1 rights, but it still might prove to be a bargain going forward. 

F1 races have averaged around a million viewers over the last year, according to SBJ, and that only promises to improve with six events now in the Western Hemisphere (Austin, Brazil, Mexico City, Miami, Montreal and Las Vegas).

Best of all, the sport is no longer waiting for an American driver to emerge as F1’s saviors in the US. 

‘I think it would be great for both of them to happen, it would further enhance Formula One here,’ McLaren Racing CEO Zak Brown told Motorsport.com last month.

‘But we don’t have either today, and look how popular Formula One is now in America.

‘So I’d love to see it happen, but I don’t think it has to happen because Formula One is hot today without it.’

But now the States will hold three races from 2023 including the proposed Las Vegas layout